For most expats in the UAE, retirement planning is a gap they need to close themselves. The federal pension system covers UAE nationals, so expats generally have no UAE state pension, and the end-of-service gratuity is a lump sum linked to length of service rather than a retirement income. What you live on later depends largely on what you build now.
This retirement guide covers end-of-service benefits, how much to save, building a portfolio, currency and reviewing the plan as retirement approaches.
In many countries, a state pension and a workplace pension provide a base of retirement income. Expats in the UAE generally receive neither from the UAE, and for most private-sector expat employees the main statutory benefit at the end of employment is the gratuity. Pension rights built up in a home country may continue but may be smaller than if you had stayed; check them with the scheme or a qualified pensions specialist there, as pension administration and transfers are outside the scope of this article.
The absence of personal income tax on salaries can make it easier to save a meaningful share of income. Retirement wealth planning is largely about turning that capacity into regular saving rather than higher spending.
Under Federal Decree-Law No. 33 of 2021, in force since 2 February 2022, the end-of-service gratuity is based on basic pay:
The gratuity is payable within two weeks of the end of employment. As an illustration, ten years of service gives 105 days (5 × 21) plus 150 days (5 × 30), a total of 255 days of basic pay. The DIFC and Abu Dhabi Global Market (ADGM) have their own employment rules.
Because the gratuity is calculated on basic pay, which can be well below total salary, and is paid out each time you change employer, it may fund only a small part of retirement.
Cabinet Resolution No. 96 of 2023 introduced a voluntary alternative to the gratuity, run by the Ministry of Human Resources and Emiratisation (MoHRE) with the federal securities regulator, now the CMA. It is open to private-sector employers and employees, including in free zones. Participating employers contribute monthly on basic salary: 5.83% for employees with under five years’ service and 8.33% for five years or more. Employees may add voluntary contributions of up to 25% of total salary and choose how these are invested; if no choice is made, they go into a default fund designed to protect capital.
In the DIFC, the DIFC Employee Workplace Savings scheme (DEWS) replaced the end-of-service gratuity from 1 February 2020. Employers contribute 5.83% of basic salary a month for employees with under five years’ service and 8.33% for five years or more.
Whichever applies, find out what you are entitled to and when you can access it, and treat it as one part of your plan.
There is no single right figure, but three steps can help you set a target.
Estimate what you expect to spend each year in retirement, in today’s money and in the currency of the country where you plan to live. Include housing, healthcare and travel to see family, which can be larger costs for expats.
A common framework divides the annual amount you need from your portfolio by a withdrawal rate, the share of the portfolio you plan to draw each year. A lower rate requires more capital but leaves more room for weak markets, inflation and a long retirement. The table shows the arithmetic for illustration only; it is not a projection, and no withdrawal rate is assured to be sustainable.
| Annual spending from the portfolio | Withdrawal rate | Capital implied |
|---|---|---|
| USD 100,000 | 3% | About USD 3.3 million |
| USD 100,000 | 4% | USD 2.5 million |
| USD 100,000 | 5% | USD 2.0 million |
The saving needed each year then depends on the time left, what you have already saved and the returns you assume. Retirement planning services and calculators can model this, but the result is only as reliable as the assumptions, so cautious ones revisited regularly can help.
Investing for your retirement over a long horizon can allow more exposure to growth assets than a short-term goal would, because there is more time to recover from falls, although losses are always possible. The core decisions are:
Our guide to investment portfolios and asset allocation covers how to set the mix. If you receive a lump sum, such as a gratuity, our article on dollar-cost averaging versus a lump sum explains the trade-offs between investing at once and in stages.
Where you retire shapes most of the plan. If you will spend in sterling, euros, rupees or another currency, a portfolio held entirely in US dollar terms carries exchange-rate risk against your future costs. Because the UAE’s currency is pegged to the US dollar, this risk can be easy to overlook while you live here. If you are undecided, building exposure to the likely currency gradually may be more practical than committing all at once.
The country you retire to may tax pensions, investment income, gains or estates differently from the UAE, and healthcare costs and insurance availability vary by country and age. These are matters for qualified tax, legal and insurance professionals in your destination country, ideally several years before you move.
The decade before retirement is when the plan tends to need most attention. A market fall shortly before or after you start drawing income can do more lasting damage than the same fall earlier, because withdrawals during a fall can turn temporary losses into permanent ones. This is known as sequence-of-returns risk. Approaches people commonly consider include:
A retirement financial planner can help you test the plan against different market conditions, with the aim of keeping risk consistent with what you can afford to lose. For the wider picture, see our guide to financial planning in the UAE and our page on working with a financial advisor in Dubai.
Expats generally have no UAE state pension, because the federal pension system covers UAE nationals. Private-sector expat employees are usually entitled to an end-of-service gratuity instead, and some employers offer a workplace savings scheme. Retirement income beyond that depends on personal savings and investments.
Under Federal Decree-Law No. 33 of 2021, the gratuity is 21 days of basic pay for each of the first five years of service and 30 days for each year after that, with the total capped at two years’ wage. DIFC and ADGM have their own rules.
It depends on your expected spending, the country and currency you retire in, and how much you plan to draw each year. One framework divides annual spending from the portfolio by a withdrawal rate to estimate the capital needed, but no rate is assured to be sustainable.
As early as possible, because time allows savings to compound and gives more room to recover from market falls. Even if retirement is decades away, it helps to set a target, save a fixed share of income and review the plan each year.